Modus Operandi: Cash poor, time poor? you need to get a grip

New article for Modus Operandi, Winter 09 Issue.

Patricia Wheatley Burt, FCIPD, Director, Trafalgar, advises firms to adopt a performance management strategy to confront the recession and develop a competitive edge.

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Careers Panel advice for Legal Executive Journal

Check out Patricia Wheatley Burt's recent contribution to the Careers Panel for Legal Executive Journal. The follwing questions are answered:

I am an experienced commercial litigator working for a mid-sized regional firm but I would really like the challenge of working for one of the big City law firms. However, they don't seem to employ many legal executives and I would only be interested in a relatively senior position. Is this a realistic ambition?

My firm is closing the office I work in and consolidating it with one about 10 miles up the road. The firm insists it is a reasonable request under the terms of my contract but it will add to my journey and complicate my childcare arrangements. I don't want to leave if I can avoid it - What should I do?

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The Changing Face of the Professionals Seminar – 7th December 2009

There are continuing and growing pressures on all sides for Professional firms, your Partners, Principals and staff. Trafalgar, in collaboration with Horwath Clark Whitehill (HCW) we would like to invite you to a seminar where we will discuss what the risks, rewards and possible solutions are, to help firms like yours position yourselves for the future.

We have to believe there will be an up-turn although it may take longer than any of us would like. The careful and cautious may eke out a living into 2010 and survive, but what happens afterwards, is survival enough? Napoleon believed you should attack rather than defend your position, so action is better than waiting either for the economy to get worse or for the good days to turn up miraculously.

Managing Partner or members of the Executive Team are invited to this event at HCW’s London offices, on Monday 7th December 2009 from 5.30pm and for drinks afterwards.

Click the title to download the booking form. Please direct any queries you have to Bianca Acke: bianca@trafalgarpeople.com or call on +44(0)207 565 7547.

• David Furst and Louis Baker from HCW, will be offering ideas on professional practice alternative structures as well as the financial models that firms should be considering based on their wealth of experience in the professional sector.

• Having a plan and model for your firm is a start, the reality is populating it with highly motivated and realistically reward Partners and staff. Patricia Wheatley Burt and Roger Flaxman, will highlight the compelling need to reward only those professional values and behaviours which ensures your firm has aligned its thinking on strategic risk and know it is clearly understood by all.

This seminar qualifies for 1 CPD point.

The Downturn Revisited – Preparing for Nessie

By Rohit Talwar

Over the last month or so we’ve witnessed a growing sense across business and government sources that we talk to that we are heading for a multi-dip recession. While most of the European Union countries have officially pulled out recession, the UK is still struggling to launch and President Obama is issuing ever-starker warnings about the risk of a double dip recession. Conversations with investment bankers and those with connections ‘on the inside’ of the banking system are all suggesting that the potential for a massive collapse that could make the last two years look like a minor correction.

However, rather than a double dip, our view is that we are looking at more of a roller-coaster decade in which we will see regular rises and falls in different economies around the world. Our colleague Ian Pearson refers to this as a ‘Loch Ness Monster’ downturn – with uneven peaks and troughs emerging with very little warning. The pain will be felt quite unevenly – those economies that have done most to curb or prevent their banking system from entering into huge leveraged debt transactions and complex high volatility derivatives contracts are likely to fare best – or suffer the least relative pain.

Perhaps the most apocalyptic view in recent weeks came from Société Générale in its ‘Worst Case Debt Scenario’ report which warned clients to prepare for a possible "global economic collapse" over the next two years. They highlighted that total US public and private debt was now 350 per cent of GDP and many years of deleveraging would be inevitable – even without further shocks. The report warns that even without any new public spending, within two years, government debt would rise to 125 per cent of GDP in the US and the Eurozone, 270 per cent in Japan and 105 per cent in the UK. They estimate total global sovereign (state) debt could reach $45 trillion - a rise of 250 per cent in a decade. Under their "Bear Case" scenario, we would see a further fall in the value of the dollar, a decline in global equity prices, a sharp retreat on property values and oil would retreat to $50 a barrel in 2010.

So how do deal with such an apocalyptic scenario. Hope, head in the sand and betting it all on number 36 on the roulette wheel are probably not the most sustainable solutions. As an alternative, here are six ideas from our work on Winning in a Downturn:

* As good leaders it is now incumbent upon those driving public and private sector organisations to do a serious evaluation of the worst case scenario and what their responses might be.

* We need to develop good early warning systems that require us to get as close to funders, customers and business partners to track how their thinking is developing and understand what their responses might be.

* Work with your key suppliers and customers to look for innovative solutions that will cut costs and time from the value chain and improve the quality of the outputs and outcomes. Devote resource to serious open innovation experiments – incentivise all involved to succeed.

* Look for innovative approaches to staff training and development – volunteering, guest speakers, e-learning and shared courses – even with competitors – are all routes to consider.

* Don’t be tempted by mergers as a way out – particularly not between loss-making competitors (BA and Iberia take note). Such events inevitably divert management time and attention to internal politics, alignment and integration – when their real focus should be on the market place.

* Put off technology replacement projects. Even if the straight financial case for laptop or desktop replacement may be strong, think hard about whether you want the inevitable disruption and diversion of staff time and effort and be realistic about what the true performance gains are likely to be.

M&A and restructuring: Take the Long View

Check out the latest article from one of our Consultants Danny Davis whom CIMA recently interviewed about merger integration and efficiencies improvements.

The number of mergers and acquisitions taking place has fallen sharply as the economic downturn sets in, but there are signs that companies with cash are starting to hunt for bargains. M&A expert Danny A Davis tells Nigel Ash how negotiating a good price is only the first step. Without planning ahead for integration, an acquisition could turn out to be a white elephant.

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For more information contact Bianca on +44(0)207 565 7547 or email bianca@trafalgarpeople.com

New article published on AccountingWeb - Staff management: Diet or amputation?

Financial pressures are pushing businesses into tough decisions, says Patricia Wheatley Burt of HR consultancy Trafalgar.

- Businesses need to get the balance between risk and reward right.

- 'Amputating' staff and departments is a huge risk.

- Putting the business on a 'diet' but cutting salaries and benefits could be more effective.

- Beware when using interim staff and ensure you're getting value for money.

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A Fair Price?

By: Roger Flaxman ACII

Chartered Insurance Practitioner

Experienced independent Professional Indemnity Practitioner and Consultant

If you are not a large, prominent law firm with substantial negotiating power this year's insurance renewal could be painful; even terminal for some.

The single renewal date for all UK solicitors creates an artificial market that disadvantages all but the prominent firms that the insurers want on their books because they pay big premiums. These firms can expect to pay little more than last year, and some even less if they use the best brokers. For everyone else the insurers are looking to sort the wheat from the chaff and actually decline to offer renewal to the less attractive firms. For those that are on the cusp of insurers' threshold of acceptability increases are already being predicted of between 40% and well over 100%. This can put a firm out of business and that is rarely in the best interests of their clients and the consumer at large.

Considering how much detail has to go into the renewal proposal forms each year the amount of time that the underwriter actually spends considering the information is measured in minutes. There simply is not enough time in the period from now until 30th September for underwriters and brokers to do justice to every firm's proposal for insurance. The small and weak suffer.

The profession is awash with exhortations from brokers offering Top Tips for getting the best quote. None of these are wrong but they are not enough to make a real difference. Thousands of renewal quotes will not be available until the last few days or hours before the deadline. This leaves the firm with little or no choice but to accept what is on offer and we know from the experiences last year what trauma that causes.

Why? Underwriters are ultimately in control of the renewal process not the brokers. Underwriters can hold up the quotations to balance their book and their judgment and there is little if anything that the broker can do about it. This is not malicious, as it may appear, but a natural consequence of the market being flooded with thousands of applications in so short a time. Market forces are such that it is in the commercial interests of underwriters to delay quotes to ensure their competitors don't swipe the business away from them by last minute undercutting.

Underwriters are concerned about two things; market share and selecting out the firms they anticipate will give them losses. Their instincts, their statistics and the "intelligence" they receive from panel lawyers about the present upswing and predicted tsunami of claims against solicitors all combine to create a frenzy of activity to gather in enough money in one month to last them the next year.

No other profession suffers from the single renewal date. No other profession has the extensive policy cover given to solicitors. No other profession has so many firms in the Assigned Risks Pool (presently circa 160 and predicted to rise three fold next month). No other profession gets free run off insurance if they cannot pay the premium.

Are these values in the best interests of the profession? There is no doubt that the insurance market is becoming increasingly sceptical about the wisdom of the solicitors PI model and history shows that there is always a last straw that breaks the camel's back; underwriters take up stumps and walk with bat and ball into the pavilion.

Solicitors PI business is highly desirable to PI brokers because it is all about price. There is not much else to negotiate. The market is dominated by a comparatively few brokers and some of these are really very expert. However, there is not much they can do to exhibit their expertise in the system currently adopted of a single renewal date and a one size fits all master policy.

No other profession has done this. Why? Because every other profession would have to get their members to vote in favour of it; and that would never happen. Having been the architect of the original compulsory PI schemes for the ICAEW and RICS from their inception I am in no doubt at all that those professions are better off with a selection of Listed insurers and the ability to negotiate throughout the year with flexibility of cover to suit the size and nature of the firm.

"One size" (insurance policy) does not fit all in any profession and it is in the best interests of a profession to recognise the differences and get the insurance market to do what it does best.; match the horse to the course and combine flexibility of cover, market and price to a professionally driven compulsory programme that allows underwriters and brokers to serve solicitors as well as they serve other professions.

This year's renewal season will be closely watched.